FARGO - If a trade war breaks out between the U.S. and China, North Dakota soybean farmers could take big losses.
President Donald Trump announced Friday, June 15, that he's imposing 25 percent tariffs on $50 billion in goods from China. In response, Chinese officials vowed to impose similar trade barriers on U.S. goods, the Washington Post reported.
Seventy-one percent of North Dakota's soybeans are exported to Asia, most of them going to China, which brought $1.5 billion in revenue back to the state.
Of other North Dakota agricultural exports, 95 percent of its corn, 88 percent of its beef, 86 percent of its pork, and 100 percent of its poultry go to Canada and Mexico, the Farm Bureau reports.
Soybean exports to China could drop by as much as 65 percent if China imposes a retaliatory 25 percent tariff on soy, according to a study cited by the American Soybean Association.
Austin Langley, a 26-year-old soybean farmer in Warwick, N.D., about 20 miles south of Devils Lake, says that would be disastrous for his fortunes.
Langley, who's been farming for four years with his father and two uncles, said trade wars have hurt the U.S. economy in the past.
"A lot of guys say we can ride it out - short-term pain for a long-term gain," but young farmers could be put out of business, he said. "Working things out, negotiating, creating bilateral trade deals is the way to go."
In Rolette, N.D., Ryan Pederson was digesting the news while trying to determine how much damage hail had done to his soybeans overnight.
"There is no doubt that it will affect our bottom line," if there is a trade war, he said. "North Dakota is a producing state, not a consuming state, so we need free trade."
U.S. and Chinese officials in recent weeks had made progress on a deal that involved up to $70 billion in additional purchases of American products, the Washington Post reported. But the Chinese offer was now "invalid," a Chinese statement said.
U.S. growers shipped roughly $14 billion in soybeans last year to China - their No. 1 export market, the American Soybean Association said, adding that the group is "disappointed in the Administration's decision."
"As a soy grower, I depend on trade with China," said Davie Stephens, vice president of ASA. "This is a vital and robust market that soy growers have spent over 40 years building and, frankly, it's not a market U.S. soybean farmers can afford to lose."
Nancy Johnson, executive director of the North Dakota Soybean Growers Association, cautioned that the tariffs don't go into effect until early July.
"We continue to hope there will be some constructive conversation," Johnson said. "Certainly we're very concerned. The farm economy is already in a very down position."
Johnson said her group agrees that the Chinese haven't played fairly on trade, "but right now we feel like we're a bargaining chip" in the negotiations.
The North Dakota congressional delegation also weighed in on the issue.
"In a meeting with the President last week, I outlined the importance of ensuring that valuable export markets remain open and American products do not face a competitive disadvantage due to retaliatory tariffs, such as those announced today by China," Republican Sen. John Hoeven said.
Democratic Sen. Heidi Heitkamp said she met Friday with North Dakota farmers and ranchers who were concerned about a trade war.
"A better way to deal with China would be focusing on trade enforcement to create a level playing field for American farmers, ranchers, and manufacturers. Instead, the administration is asking U.S. agriculture producers to take a hit when they can least afford it," Heitkamp said.
Republican Rep. Kevin Cramer was at the White House Friday with a delegation of North Dakota farmers and ranchers to discuss trade and tariff issues with U.S. Secretary of Commerce Wilbur Ross and U.S. Department of Agriculture Deputy Secretary Stephen Censky.
"The delegation delivered a clear and concise message to Secretary Ross and Undersecretary Censky: they want better deals for ag producers," Cramer said. "They expressed the understanding for using tariffs as an integral part of trade negotiations but stressed concerns about the potential negative impacts on agriculture when tariffs are used as a weapon in a trade war."
The Post reported that the president said the U.S. would "pursue additional tariffs," raising the specter of a tit-for-tat trade war that business leaders and many congressional Republicans fear.
Friday's action follows an administration report in March that complained China had forced foreign companies to surrender their technology secrets in return for market access and had pilfered other advanced U.S. technologies through a campaign of cyber-theft and investment in Silicon Valley startups.
This article contains information from the Washington Post.